Focus remains on the euro

In what are otherwise relatively quiet ‘summer markets’, the focus remains on the euro, which has risen sharply  over the past month or so. It advanced further against the dollar yesterday, trading up $1.19 before easing back a little, and looks like it wants to test the $1.20 level.

Elsewhere, bond yields in the core markets were unchanged (Germany) to a touch higher (US and UK), while equity markets were mixed (European stocks gave up some of Tuesday’s gains, US indices made marginal gains

The Bank of England’s MPC announces its latest policy decision today. It voted 5-3 to keep interest rates unchanged at 0.25% at its last meeting in July, with the 3 dissenters voting for a 25bps hike. Data published since then have shown a notable slowdown in economic growth in the first half of this year as well as some easing in inflation, which may be enough to persuade a majority to again vote to stay on hold. A vote to raise rates today would certainly be a shock to markets. Ahead of the decision, sterling is trading at 89.5p to the euro

At home, Exchequer returns show tax revenues were up 4.5% year-on-year over the first seven months of 2017 albeit slightly below target (by 0.8%)

Data due today include services PMIs in the main economies as well as jobless claims in the US